Despite weeks of pleading with the banks that were bailed out by the government in the credit crisis, there are still no signs that those banks are prepared to lend much needed funds to businesses, preferring instead to use the cash injection to build up their own stockpile.
In their latest attempt to get banks lending the government is resorting to having to guarantee loans or at least a large chunk of any funds that do eventually reach their intended destination.
The new scheme will see the government providing insurance against half the risk of loans made to small and medium sized businesses, guaranteeing up to £20billion of debt. However Peter Mandelson appears to be struggling to secure cover with trade credit insurers and has said that ‘The job of insurers is to insure, in bad times as well as good’.
Welcome to the real world!
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